Fighting the good fight

Ruth Green, IBA Multimedia Journalist

Monday 16 April 2018

Anti-corruption protests have become an all too familiar feature of life in Romania. As the country’s strong track record on fighting corruption looks increasingly under threat, Global Insight assesses whether this is a trend with serious implications for the rule of law across Central and Eastern Europe.

Romania’s come a long way. Once derided as the ‘poor man of Europe’, today it is the fastest-growing economy in the European Union and has been lauded for its efforts in tackling corruption head on. As one of the EU’s newest members, the country remains under the scrutiny of the Cooperation and Verification Mechanism (CVM) – a measure introduced by the European Commission (EC) to monitor progress made both by Romania and Bulgaria (which also entered the EU in 2007) on judicial reform, corruption and, in the case of Bulgaria, organised crime.

“We’ve seen what happened in Hungary, what’s currently happening in Poland, and this is not going to stop without very decisive action

Elena Calistru
Chair and Founder, Funky Citizens

However, moves over the past 18 months to pass several controversial laws, including legislation that critics say will weaken Romania’s judicial independence and make it more difficult to prosecute high-level officials, threaten to undo much of this progress. Elena Calistru, Chair and Founder of Romanian non-governmental organisation (NGO) Funky Citizens, says the laws could have a detrimental impact on the country’s ability to fight corruption. ‘The amendments were passed, changed and then passed in a very swift manner, so it was very hard to see what was left and what wasn’t at the end of the debate,’ she says. ‘These laws are very suspect; they have proposed several changes that might appear as minor, but have a very important effect, especially over the work of prosecutors and over their independence. These legislative changes have a multi-layered impact, but the most visible one is related to the fight against corruption.’

The draft laws include attempts to revise the country’s Criminal Code and Criminal Procedure Code, as well as bringing the country’s judges, prosecutors and state institutions, including the highly successful National Anti-Corruption Directorate (DNA), under greater political control. Calistru says all of these proposals must be put in the context of moves elsewhere in Europe to undermine the rule of law. ‘We’ve seen what happened in Hungary, what’s currently happening in Poland and this is not going to stop without very decisive action. Unfortunately, we’ll see how well the government in this country copes with this contagion and tendency towards attacking the independence of the judiciary and I would say that it has become a very worrying trend that should somehow be mitigated before it goes mainstream.’

These developments haven’t escaped the notice of anti-corruption bodies. In December 2017, Group of States against Corruption (GRECO) – the Council of Europe’s (CoE) anti-corruption monitoring agency – announced it was carrying out an urgent ad hoc evaluation of draft laws in both Romania and Poland. This was the first time GRECO had launched an evaluation outside its ordinary monitoring cycle after introducing a new rule in June 2017 to enable the agency to investigate concerns when either an institutional reform, legislative initiative or procedural change could violate the CoE’s anti-corruption standards.

“We have criticised the fact that the Romanian authorities are rushing through Parliament what they call “urgent procedural reforms” that are so profound that they should require a proper debate

Gianluca Esposito
Executive Secretary,
Group of States against Corruption

Growing disquiet over the rule of law and separation of powers in Poland has been well documented. In late December, the EC took the unprecedented step of triggering Article 7 of the 2009 Treaty of Lisbon against Poland, giving the country three months to reverse judicial reforms or risk losing its voting rights.

Romania has not been dealt this card, but GRECO’s Executive Secretary Gianluca Esposito says the speed with which the laws have been passed is already cause for concern. ‘For many, Romania has been on a very positive trend of reform,’ he tells Global Insight. ‘We are concerned about a number of initiatives that have been taken and also by the way they have been undertaken. We have criticised the fact that the Romanian authorities are rushing through Parliament what they call ‘urgent procedural reforms’ that are so profound that they should require a proper debate. I think it’s noticeable that we’re seeing a slowing down of the process of reform from our last evaluation and compliance report.’

This has been most apparent in the rise and fall of the DNA, which has fast become a shining example of the country’s anti-corruption crusade under the helm of its Chief Prosecutor Laura Kovesi. In 2015, the DNA successfully indicted then Prime Minister Victor Ponta over allegations of tax evasion and money laundering, forcing him to resign. In a filmed interview in June 2016, Kovesi told Global Insight she was proud of the DNA’s track record on fighting corruption, but warned that her office was already facing challenges: ‘In Romania several times we’ve had the situation where there have been attempts in Parliament to amend the legislation to try and reduce our investigative capacities or even to make certain categories of officials immune from prosecution for corruption offences. These attempts are a danger to our work because, if they succeed, our efficiency will be affected.’

The DNA continues to root out high-level corruption. In 2017 alone it successfully prosecuted around 1,000 individuals, including 12 high-level government officials, and convicted 700 people on corruption charges. These are encouraging numbers. However, proposed laws, combined with the disciplinary action launched recently against Kovesi and her deputy Marius Iacob by the Judicial Inspectorate for alleged transgressions, have done much to dampen Kovesi’s optimism. ‘I wish I could be as positive as I was in 2016,’ she tells Global Insight. ‘Romania crosses a very difficult moment. It is a turning point. If the amendments to the justice laws and to the criminal codes will be adopted, if the high-level public officials convicted by courts for corruption offences will continue to be supported by their fellows in the political parties, in government and in Parliament, we will face a regression.’

Backtracking on reform

In light of these developments, there’s a genuine concern that Romania could be heading in the same direction as some of its Central and Eastern European counterparts and risks backsliding over corruption and the rule of law.

However, Jitka Logesova, former Head of Regional Compliance, Risk and Sensitive Investigation at Kinstellar and Senior Vice-Chair of the IBA Anti-Corruption Committee, says Romania’s track record on enforcement makes it stand out in the region. ‘From my perspective, the issue is not that law is missing, of course you have certain areas where this is the case, but often the law is there,’ she says. ‘What’s missing is the enforcement and my question is why is enforcement so low in certain countries? Romania is an exception as the level of local enforcement is very high. It’s really the only example as in the rest of the region enforcement is very low. The DNA has been extremely active over the past few years, but we’ve seen now that the government has tried to dampen its effectiveness.’

Countries such as Hungary have not shown the same commitment to clamping down on corruption in practice, says Logesova, who is co-chairing the IBA CEE & Central Asia Anti-Corruption Enforcement and Compliance Conference in Prague on 12–13 November 2018. ‘In Hungary, we have indeed seen some cases of legislation that may be considered to be prejudicial to the transparency and the anti-corruption fight, but the general anti-corruption framework, legally speaking, is well established in Hungary,’ she says. ‘The real problem, however, is more with the application of the existing laws in relation to corruption. Although there are some examples to the contrary… criminal authorities are still reluctant to initiate criminal investigations in high-profile cases, including vis-à-vis legal entities. Even if they do, there is a sort of corruption glass ceiling, which means that authorities very often cease the investigation if they believe that power players with well-established connections or economic power are involved.’

As Romania reaches this juncture, it’s worth casting our eyes southward towards Bulgaria, which also entered the EU fold in 2007. Despite some small improvements, the country was still ranked the most corrupt country in Europe in the 2017 Transparency International Corruption Index. In December 2017, the Bulgarian Parliament passed an anti-corruption bill that was later vetoed by President Rumen Radev, who said it failed to offer the means to effectively investigate corruption networks in the country. However, a month later, Parliament overturned the veto, instead paving the way for the government to establish a unit specifically designed to investigate high-level corruption.

So far, so good, it seemed, but despite appearing as if the country was trying to emulate Romania’s DNA success story, critics argued that the unit would lack independence. The double volte-face also drew international attention because Bulgaria had just assumed the EU’s six-month rotating presidency. Patricia Gannon, a senior partner at Karanovic & Nikolic in Belgrade and Co-Chair of the IBA European Regional Forum, says implementation will be the true litmus test. ‘The challenge with passing legislation one way or the other is that it’s only as effective as its implementation,’ she says. ‘There is a real opportunity to pass and actually implement legislation and the proof of the intention will be clear once the limelight of the presidency is over.’

Drago Kos, Chair of the Organisation for Economic Co-operation and Development (OECD) Working Group on Bribery – of which Romania is not currently a member – believes these developments are indicative of broader problems at the EU level. ‘I still hope that Bulgaria will try to implement the laws, but it’s so strange to discuss now how Romania should follow the example of Bulgaria as opposed to Bulgaria lagging far behind Romania in anti-corruption efforts,’ he tells Global Insight.

‘I think all of this combined is a real issue for the EU,’ adds Kos. ‘This simply underlines the lack of interest once again in the EU fighting corruption in their Member States. The new Member States that have acceded to the EU reached the peak of their anti-corruption efforts on the day of their accession. The EU was very effective in pushing them with the “carrot and stick” approach. Then, on the day of accession, everything fell apart. What we see now in Romania and Bulgaria are just the most radical forms of disintegration of anti-corruption systems. I’m sure the politicians in Romania were counting on the fact that Brussels has too many other problems to deal with and they won’t devote so much attention to what is going on in Romania.’

Bruno Cova, a partner at Paul Hastings in Milan and Co-Chair of the IBA Anti-Corruption Committee, agrees there is a broader problem of maintaining standards across EU Member States. ‘The EC has had observations over the past few years in other former Soviet states – Poland, Hungary and now in Romania and Bulgaria – there is a concern about what’s happening in these countries. They were probably admitted into the EU a bit prematurely. As long as these countries remained outside, the ability to join the EU was a great sweetener and a great encouragement to change those practices. Now that they are part of the EU, some of those countries seem to have taken some steps back and are less willing to comply with the rule of law and European laws.’

Although such attacks on judicial independence and anti-corruption institutions are concerning, the EU’s tough stance on Poland may deter other members from following in their footsteps. ‘It sets worrying precedents in a region where judicial independence and other rule of law principles are not fully entrenched,’ says Cvete Koneska, a senior analyst at Control Risks. ‘That does not necessarily mean that other countries will follow suit – the drawn-out conflict between Poland and the EU also sets a precedent, and one that smaller EU members in the region are likely to want to avoid.’ The lure of access to the coveted Schengen Area could be one way for the EU to encourage Romania and Bulgaria to clean up their act, adds Koneska: ‘In the case of Romania and Bulgaria, the EU has more leverage as the eventual accession to the Schengen zone is closely linked to progress on rule of law and anti-corruption enforcement.’

Christopher Lehmann, Executive Director of the Central and Eastern European Law Initiative (CEELI) Institute in Prague, believes the EU is working well within its limits. ‘The EU is doing probably as much as it can,’ he says. ‘It’s taken some pretty firm positions, especially with regards to what’s been going on in Poland. At the end of the day, it’s a political organisation and it has to operate in a political environment. I think leadership in the EU has been pretty clear where they stand on these issues, so I actually give them a lot of credit.’ Poland is currently the greatest beneficiary of EU handouts, but there are ongoing talks among EU members to make standards on democracy and rule of law a prerequisite for receiving EU funds.

Civil society crackdown

NGOs and other civil society groups have played a major role in defending anti-corruption efforts in Romania to date. However, in November 2017, the country’s lawmakers passed a bill that included a provision to reduce NGO access to private funding through sponsorship and donations. Elena Calistru, Chair and Founder of NGO Funky Citizens, says such legislation mirrors attempts elsewhere in Europe to quash NGO activity and support for public protests. ‘It’s been a harsh time for civil society in Romania and it’s been very similar to what we’ve seen in Hungary and what’s been happening in Poland,’ she says.

In June 2017, the Hungarian government adopted legislation to restrict foreign funding to NGOs in a move that echoed Russia’s infamous 2012 law requiring foreign-funded NGOs to register as foreign agents. In October, Poland signed into law a bill that will bring NGO funding in the country under a centralised agency, a move many interpreted as yet another sign of suppressing civil society. As part of a wider campaign against NGOs and institutions funded by Hungarian-born financier George Soros, Hungary also introduced a law last year that critics argue will restrict academic freedom and threatens the closure of the prestigious Central European University in Budapest.

This wave of legislation in Hungary and other countries is extremely concerning, says Justice Richard Goldstone, Honorary President of the IBA’s Human Rights Institute, who has taught recently at the university. ‘Prime Minister Viktor Orbán’s attacks on Soros and Soros-funded institutions are quite ridiculous and an excuse for cheap politicking, anti-Semitism and a way of pandering to his right-wing supporters. Indeed, the crackdown on NGOs that speak out against these autocratic governments is quite inconsistent with the rule of law in general and in particular the right of free speech.’

Christopher Lehmann, Executive Director of the CEELI Institute in Prague, believes the latest crackdown on civil society in Romania is in keeping with what he’s seen elsewhere in the region and further afield. ‘The problem is that part of the “pushback” is that governments recognise the success of some of the civil society campaigns and so they then feel threatened and make it impossible for civil society organisations registered and able to function,’ says Lehmann. ‘The Russian practices are now starting to be exported to other countries in the region – it’s a real tug of war. It’s starting to spread not just across the region, but across the world, as we’re also seeing this trend in Central Asia.’

Although the EU presidency is not based on merit, but simply rotated among its members and is planned in advance – indeed Romania is scheduled to host the presidency in the first half of 2019 – Lehmann says it could help shine a spotlight on Bulgaria and other countries in the EU where the rule of law is simply lacking. ‘I think it’s a good thing for some of these countries to have to step up to the plate and have to take on the EU presidency,’ he says. ‘Then they’re front and centre both in terms of the other 27 members and there’s also more attention across Europe to what’s going on internally in their countries.’

And where the EU itself may be lacking in fighting corruption, Lehmann says other organisations like GRECO are more than helping to fill the void. ‘There’s so much that is being done in the civil society sector and by other international organisations,’ he says. ‘GRECO is doing continuous monitoring and reporting of the extent of corruption within these countries, within the judiciary and within the prosecution services in these countries.’

“The DNA has been extremely active over the past few years, but we’ve seen now that the government has tried to dampen its effectiveness

Indeed, GRECO’s work has been fairly exhaustive to date, focusing on monitoring specific areas of corruption across its 49 Member States, which include the 47 members of the Council of Europe, plus the United States and Belarus. So far it has published evaluations on incriminations and political party financing, corruption among members of parliament, judges and prosecutors and, mostly recently, the group began looking at the prevention of corruption in government and law enforcement authorities. As Esposito explains, GRECO has a very strict compliance procedure whereby it issues a report, initially giving a country 18 months to implement its recommendations and, if deemed non-compliant, a further 12 months to implement its recommendations. ‘Thereafter we do have the option to issue a sanction of sorts – the possibility of issuing a declaration of non-compliance – but so far we have not issued any statement like that,’ he says.

For Esposito though, successful reform comes when a leopard really wants to change its spots. ‘I think personally the key is in the word “internalised”,’ he says. ‘Reforms in countries are successful when the country itself owns the reform process and is convinced it is doing it not because somebody else has asked, not because it’s written in any kind of condition to accede or not to accede to the EU or any other body, but because it believes it is important for the country itself.’

An uncertain future

Most commentators agree the protests in Romania are encouraging and indicative of the ongoing public distaste for corruption. However, the volatile political environment is not enamouring others to Romania’s investment potential: in mid-January, Shinzo Abe made a historic visit to Bucharest – the first time a Japanese Prime Minister had visited the capital. His timing couldn’t have been worse as Romanian Prime Minister Mihai Tudose had just resigned and the trip was seen largely as a wasted opportunity for the country.

Such events, combined with the latest legislative developments, pose a very real threat to Romania being taken seriously on the world stage, let alone its chances of joining other international organisations, notes Kos. ‘The people of Romania would like to see the rule of law applied equally to everybody, but this is exactly what Parliament has decided to change now,’ he says. ‘Romanians will fight it, but of course this has consequences for the aspirations of Romania to join some other international organisations, including the OECD. Romania was quite a serious candidate to join the OECD Working Group on Bribery, but after the most recent events, we would be very careful in considering the request of Romania to join the Working Group.’

Whatever happens next in Romania, both Kos and Esposito agree the anti-corruption fight can only move forwards. ‘Romania has shown to the world that it is possible to investigate and prosecute all suspects of corruption,’ says Kos. ‘Now we have a problem and if there are no very concrete reactions from the EC then I’m afraid that we will face similar events in some other countries, too, and then the whole fight against corruption will go back 20 to 30 years.’

‘Countries have really made huge reforms, in particular changes in the legal system so that by and large they are in line with international anti-corruption standards,’ says Esposito. ‘That’s important and something that should be underlined, not least to have clarity when it comes to the private actors and lawyers that actually operate across countries. You can expect similar criminal law procedures across our GRECO membership. There has been progress, but we don’t want to see this progress going backwards, we want to see this progress continue.’